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It
was said that Yahoo!(NASDAQ: YHOO), which just fired its CEO, is
preparing to consult investment banks and consulting firms for
what it should do next. And I think it would be more
meaningful if it call me for advice.

When a company needs help from consulting firms, it would not be
a good sign for its owners. Until now, most suggestions for
Yahoo! is to sell its Asia assets. But my suggestion is just the
opposite. For me, Yahoo! should sell its assets in the US and
hold its assets in Asia tightly.

What kind of assets should people sell? Those that will worth
less money. And what assets people shouldn’t sell? Those that
will worth more money.

I think Yahoo!’s problems are as followings:1) its major
business(Yahoo! US) is outdated and lacks potential for future
growth; 2) it lacks the sufficient innovation capacity that would
make a completely turnaround to the company’s sluggish
business(Like Sina’s launch of its Weibo service);3) The company
holds surprisingly valuable assets in Asia(shares in Alibaba
Group and Yahoo! Japan), which is completely unsynchronized with
its main business. Not to say that Yahoo! is loosing its control
on these assets.

Here is my remedy:

As its main business(Yahoo! US) still worth some money, Yahoo!
needs to sell it to companies like Microsoft who are still hoping
to catch up in the Internet arena. Accounting by its $800 million
gross operating profit in 2010, it would worth $12 billion under
the P/E ratio of 12.

Yahoo! Japan has an unclear future and is loosing value, as the
company has started using Google in its own search engine. So it
would also be sold out as soon as possible. Yahoo! Japan has a
net profit of $1.1 billion last year. Under the P/E ratio of 15,
it should worth $16 billion and Yahoo!’s 33% in the company would
worth $5.2 billion.

All these assets sold-out would give Yahoo! $17.2 billion in cash
and the money should be returned to Yahoo! share holders. So the
Yahoo! executives and board members,would never be bothered. Of
course, tax costs would be very high.

After selling out these assets, what remains for Yahoo! is the
39% share in Alibaba Group, which is the most valuable and
healthy assets for the company. According to our
expectations, Alibaba Group will grow to a company that values
more than $100 billion. If everything goes well, Yahoo!’s share
in Alibaba Group alone would worth nearly $40 billion.

But how should Yahoo! manage to convince Jack Ma to say YES to
this deal? Inviting him to become the CEO of Yahoo!. In that way,
Alibaba Group would become a public listed company through
reverse acquisition and the company tisser should be changed to
NASDAQ: ALBB, which is still available.

Disclosure: The author of the story currently holds Yahoo!.

By Fang Sanwen, founder of Snowball Finance, the parent
company of iChinaStock.com.